Quote:
Originally Posted by Berzerker
Holds true for everything.
With leasing, your interest is built into your payments. If you buy out, no matter when it is, the payoff is always full payment + the interest you would have paid over the 3-year period (or however long your lease is).
Since, on a finance, your interest is accrued, each payment you make lowers the accrual over the lifetime of the finance.
That being said, if you know you're going to want out in 3 years, then leasing may be a better option. It's tough to say what's the better position as car prices are still going up, though that may slow to stop in the next 2-3 years due to the, more or less, halting of inflation over the last year or so.
If the expected value of the car after 3 years is a normal amount of depreciation, financing and trading in after 2-3 years can save you a couple thousand in interest, provided you don't have any negative equity in the car, an advantage of leasing being the structure to have $0 in equity (positive or negative) by the time your term ends.
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You have a point. Interest on financing is accrued, so I'm not paying any interest upfront whereas with a lease lease, I'm forced to pay interest over the term. The appeal of leasing is not having to put down any cash upfront to get in the seat. I'm more concerned with what happens after 3 years and my lease term is up. Did I cost myself more if I decide I want to keep the car or do I pony up on the down payment to lessen the monthly liability with financing?